Which strategy is directly related to identifying underpriced assets?

Value investing is a strategy that focuses on identifying underpriced assets. This method is based on the premise that the market is not always perfectly efficient and that some assets may be undervalued due to various factors such as market fluctuations, negative news, or investor sentiment. Value investors seek to buy these undervalued stocks or assets at a price lower than their intrinsic value, with the expectation that the market will eventually recognize their true worth, leading to a price increase over time.

This strategy involves thorough analysis, often using financial metrics such as price-to-earnings ratios, price-to-book ratios, and dividend yields to assess whether an asset is undervalued and has the potential for capital appreciation. By focusing on fundamental value rather than market trends or short-term price movements, value investors aim to achieve solid long-term returns as market conditions correct any pricing discrepancies.